Starbucks has bowed to public outrage over its tax affairs and made a
voluntary £10m annual offering to HMRC, on top of the tax it currently pays,
for the next two years.

Several weeks ago it emerged that the coffee chain had only paid £8.5m in corporation tax since it launched in Britain in 1998, despite enjoying sales of £3bn. Since then other companies including Amazon and Google have also attracted criticism over their own tax payments, and protest groups have called for a boycott of the coffee chain.

The managing director of Starbucks UK, Kris Engskov, on Thursday made an unprecedented offer to pay an extra £10m to HMRC each year, "until we are paying corporation tax at a material rate".

Up until now, Starbucks has insisted that its UK business does not make a profit because of the high rents it pays for its shops, and therefore has paid little corporation tax.

The coffee chain also uses a number of perfectly legal mechanisms to further reduce the tax it pays, including handing a 4.7pc licensing fee to a separate arm of Starbucks in the Netherlands for image rights. It also buys its coffee from a Swiss division of Starbucks which charges a 20pc premium on the product.

News of the company's structure has provoked public outrage, with some groups arranging boycotts and protests at the chain's cafes.

Speaking to the London Chamber of Commerce today, Mr Engskov said that the "emotion of the issue has taken us a bit by surprise". The company had always organised its tax affairs "according to the letter of the law" and paid what was expected by HMRC, he said, "but not more".

"With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more," he added. "Today, I am announcing changes which will result in Starbucks paying higher corporation tax in the UK - above what is currently required by law.”

He laid out a plan – which has yet to be presented to HMRC – that would see Starbucks cease to claim tax deductions for royalty payments, coffee purchases and inter-company loans.

"We are still working through some of the calculations, but we believe we could pay or prepay somewhere in the range of £10m in each of the next two years in addition to the variety of taxes we already pay," said Mr Engskov.

If the company does not enter profitability it will continue the arrangement beyond the next two years, "until we are paying corporation tax at a material rate".

The measures are unprecedented but did little to appease protest groups such as UK Uncut. Spokesperson Hannah Pearce said the company could not offer to "pay some tax if and when it suits".

"Today’s announcement is just a desperate attempt to deflect public pressure. There’s no money yet, and hollow promises on press releases don’t fund women’s refuges or child benefits.

“This weekend 40 actions will take place in Starbucks stores in towns and cities across the country. People will be transforming Starbucks stores into refuges, crèches and other services which the Government are cutting with their unjust and unnecessary austerity plans.”